NEW DIRECTIONAL CALL PLAYS
Under Armour, Inc. - UA - close: 87.43 change: -4.93
Stop Loss: 84.90
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 3.0 million
Entry on November -- at $---.--
Listed on November 14, 2015
Time Frame: 6 to 8 weeks
New Positions: Yes, see below
The stock market's current pullback is an opportunity to snap up this footwear and athletic apparel brand on sale.
UA is in the consumer goods sector. They make shoes and athletic wear. According to the company, "Under Armour (UA), the originator of performance footwear, apparel and equipment, revolutionized how athletes across the world dress. Designed to make all athletes better, the brand's innovative products are sold worldwide to athletes at all levels. The Under Armour Connected Fitness platform powers the world's largest digital health and fitness community through a suite of applications: UA Record, MapMyFitness, Endomondo and MyFitnessPal."
The athletic shoe and athletic apparel business is very competitive. Nike (NKE) has dominated the space for years. UA is about 10% the size of NKE but it's actively fighting for market share and in 2015 UA overtook Adidas as the second biggest athletic wear brand inside the United States. Nike had sales of $27.8 billion in 2014. UA is a fraction of that with 2014 sales of $3.08 billion but they saw growth of +32%.
UA management expects sales grow +20% in 2015.
UA has been firing on all cylinders with its earnings results. Most of last year saw the company not only beating Wall Street's estimates but also raising guidance.
That trend of raising guidance has continued this year. UA has beaten Wall Street's bottom line and top line estimates every quarter this year. They have also raised estimates every quarter.
Athletic apparel and shoe companies have been some of the market's best performers in 2015. Odds are they will continue to shine in the fourth quarter and beyond.
Right now UA is correcting low. Shares are down about -17% from their 2015 (and all-time) highs. The stock should have support at the bottom of its long-term bullish channel (see weekly chart below). UA just tested technical support at its simple 200-dma on Friday as well. We see the sell-off as an overreaction as nervous traders lock in profits.
UA should bounce from current levels. Tonight we are suggesting a trigger to buy calls at $88.75, which is above some intraday resistance UA saw on Friday. We'll try and limit our risk with an initial stop loss at $84.90.
Trigger @ $88.75
- Suggested Positions -
Buy the 2016 JAN $95 CALL (UA160115C95) current ask $2.55
option price is a current quote and not a suggested entry price.
Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.
Option Format: symbol-year-month-day-call-strike